With a 49% market share among portal surfers, with 420,000 different surfers every month, with a 36% rate of unaided brand awareness among the general population, and 67% aided awareness, the managers of Israeli portal "Walla" can feel satisfied. True, the company itself provides most of this data, but nobody disputes that Walla is a leading brand.
However, ambitious types like the managers of the Israeli portal have very wide-ranging aspirations, and their expansion plans could certainly appear pretentious.
From various remarks by Walla's deputy general manager for marketing, Pini Sternschuss, it transpires that today, the portal's success serves mainly as a springboard to the future. "We are not an Internet company, we are a telecom. A content provider, a supplier of daily services, e-commerce and community services, and a provider of interpersonal communications" he explains, in an interview with "Globes". "Our competitors are the leading traditional media channels. Walla intends to be a key player in each of the existing communication channels, in television, radio, and perhaps in the press. Even today we are supplying content to cellphones and palm-pilots. Just a few weeks from now we are about to unveil the cellular portal we set up with Partner, which will include stock exchange news, office applications, addresses and telephones, a whole browser in cellular telephony and electronic diaries".
Walla, then, is effecting a transition from its positioning as a computer portal to that of a cellular portal and a pocket portal. In future, in this strongly Internet-tagged era, it intends to meet its customers by computer, in the pocket, by telephone and in the drawing room, subject, of course, to technological developments.
This is no longer some mere futuristic vision. Walla is applying this theory in the "Walla Everywhere" strategic business framework the company has set itself for the coming year. To achieve that, it has set up a content division, which includes a news desk, sport, economics and other topics. The content division works round the clock, providing news and information twenty hours daily. "Walla is built in such a way that all content is present in a central information system", Sternschuss reveals. "We supply each medium with the content that is suitable for it, in an envelope that suits it. Cellular telephony has advantages and drawbacks of its own. From the point of view of content, a broadcast has requirements of its own, as do other platforms. The content division we set up is one of our heaviest investments, and we already have 360,000 different readers daily on our news desk, that exists both in the computer, in the cellphone and in the palm-pilot".
"Globes": Why set up a content division instead of just adopting the AOL model, and merging with a long-standing, experienced content provider?
Sternschuss: "We are, in fact, studying the AOL operating model, but there also exists another model, that of Yahoo!, whereby most activity is based on self expansion, without any mergers. Ultimately, because of the structure of the Israeli market, we will conduct a considerable part of our activity independently, but at the same time, there will also be co-operation with major content bodies. We are open to co-operation. The entire Internet is composed of co-operative ventures. Walla's strength derives from the power of the brand and also from the size of the viewing public".
So the direct competitors that you have defined as traditional communications channels, are becoming allies?
"Not necessarily. A change can be expected in Israel's communications map, consisting mainly of the set-up of many new communications entities, that will provide content and commercial and other services like Walla".
Independent divisions in the marketing department
Adoption of the business strategy announced by the portal's managers, "Walla everywhere", also necessitated a structural and organisational change. And so, about one month ago, Wall's marketing department became a division, in which four independent departments operate.
The main objective of the sales promotion department is to build up a "Walla" brand presence in the field.
The purpose of the e-commerce department is to build Walla as a platform co-ordinating all large and small bodies active in the field of e-commerce, with different treatment for each one, adapted to its needs. We will again be seeing that the model is "Yahoo Shopping". The task assigned to the business development department is to correctly map out all types of co-operation and to head up the proper co-operative ventures, especially those intended for the long term (the broadband era) and less to the short term.
In addition to all these, Motorola has also set up a media sales division. This is how Sternschuss defines its activity: "The department will manage the media sales in the Internet sites network, and in future in the channels network". In other words, Walla is setting up an Internet advertising space-selling network.
Are you, in effect, setting up a service to compete with the Double Click service offered by the MSN Portal of Internet Gold?>
"We are not competing with Double Click, they are competing with us. The Walla network has three levels of advertising space selling: the first is advertising on the Walla portal. The second is advertising on Walla's satellite sites, which we have but do not own. And in addition, we will be the sales network of quality sites in various categories. The medium will operate in all types of channels, and in the broadband era also in Walla's television and radio channels".
Budgets came via advertisers, not agencies
This move on Walla's part is not an expression of dissatisfaction or pleasure with the volume of Internet advertising activity. Sternschuss has made great efforts to persuade advertising agencies and advertisers of the capabilities of the new medium, and all along the road he has encountered not a little opposition and lack of awareness. The very elements that are supposed to be more up-dated, open-minded, daring and visionary than anyone else, have proved to be clinging to a conservative, traditional concept. However, he is still optimistic.
"Today, not a few network campaigns are estimated at $50,000-100,000, so this is already financially interesting for them".
The low advertising budgets flowing to the Internet and the low response from the advertising agencies are not necessarily helpful in investing in expensive surveying systems. Even so, the leading Internet companies are currently negotiating with the Israel Advertisers Association to establish standards and surveying systems.
Scope of advertising to increase 5-fold in 2000
Sternschuss senses a change in the past six months. In 1998, the total volume of Israeli Internet advertising was estimated at only $400,000. In 1999, so Walla's research department estimates, it had already risen to $1.8 million, and in 2000, Sternschuss expects network advertising volume to increase five times over.
Sternschuss admits that the Internet does not have many attractive advertising areas, in which activity yields good results. Accordingly, as might be expected considering the low supply, the general trend is one of growth in the cost of advertising, in the cost for 1,000 exposures. In the past year, the cost per 1,000 exposures on the Internet rose by 15%, and next year Sternschuss expects it to further increase by 20%.
"But Internet advertising is also improving", he maintains. "We intend to give advertisers tools to build a smart campaign".
It is precisely on this point that Sternschuss feels the need to get a message across to advertisers: "They are capable of influencing the way advertising will look in the next few years, if they will precisely define advertisers' needs and the profile of the target public for us, and bring their creative dimension with them".
Published by Israel's Business Arena on 8 February, 2000